Employers - FAQ

No. The basis period for Salaries Tax runs from 1 April of the current year to 31 March of the succeeding year. Hence, form IR56Bs must be completed for the relevant year ended 31 March.

If you have provided a new business address in form BIR56A, there is no need to file a separate notice with the Business Registration Office. However, you should notify the Business Registration Office of any subsequent changes of address in accordance with the Business Registration Ordinance.

No. The obligation to file employer's returns (form IR56Bs) rests with the employer shown in the respective employment contract. You and your subsidiaries should file separate employer's returns.

You need not report dividends paid to shareholders of a limited company because dividends are not taxable. On the other hand, salaries and directors' fees received by directors are chargeable to Salaries Tax and should therefore be reported by means of form IR56B.

It is not necessary to file form IR56B for the proprietor /any partner of an unincorporated business or his spouse. The remunerations paid to such person are not allowable deductions under the Inland Revenue Ordinance and have to be adjusted in computing the profits chargeable to Profits Tax.

No, you cannot print your own paper form IR56B. If you wish to submit paper form IR56B, you must use the form IR56B provided by the Inland Revenue Department (IRD). You can also download the form by click here; or obtain it from 'FAX-A-FORM' Service (2598 6001).

Yes, even when your organization is entitled to exemption from registration under the Business Registration Ordinance and/or payment of Profits Tax, your reporting requirements are the same as other employers. You have to report the remuneration paid to all part-time assistants, both single and married persons (regardless of the amount paid). If you have not received BIR56A and IR56B forms by mid April, you can contact us for the forms. You can inform us by completing the IR6163 and send the completed form to the IRD by mail or by fax. The forms will be sent to you once the Employer's file has been opened. IR6163 can also be obtained through the 24-hour Fax-A-Form Service (2598 6001).

The purpose of the passport number and the HK Identity Card number is to help identify the taxpayer. To avoid the opening of double tax files for the same employee, you should supply the HK Identity Card number in Part 2 of form IR56E. However, if the employee does not have a Hong Kong Identity Card number when you prepare the IR56E, you can fill in his/her passport number and place of issue. You then have to follow up with the employee. You should, soonest possible, write in to inform the IRD to update his/her personal records when the Hong Kong Identity Card number of the employee is known.

In the circumstance described by you, you should file the following forms in respect of this employee, namely:

No. Apart from reporting the amount of "rent refunded to employee", the column for "rent paid to landlord by employee" must be completed. Even if the two amounts are the same, the column for "rent paid to landlord by employee" should not be left blank or inserted with an "X".

Yes. Tips are subject to Salaries Tax as part and parcel of the income of the employees. The amounts distributed to them should therefore be reported in item 11(k) of the form IR56B.

Where a trip is taken partly for business and partly for holiday, the IRD will look at the immediate purpose of the trip and will refrain from taxing the benefit if the holiday element is merely incidental to a business trip. However, in cases where a clearly identifiable part of a journey is taken for holiday purpose, the expenses relating to that part of the journey will have to be ascertained and will be assessed as income of the employee. In the above scenario, the cost of additional accommodation and meal expenses for those 3 days should be taxable.

If brainstorming was the sole purpose of the trip, the trip expenses were not taxable. For record purpose, Employer B should retain details of the seminar itinerary, subsequent reporting on the topics discussed and participants' involvement, etc.

The tour expenses would be taxable on the employees. Where the amount paid by the employer was not distinct and separable for individual employees, an apportionment on a head count basis might be adopted. As employee A joined the tour with his family members, his share of benefit should be greater than the seven other employees. In the absence of other more appropriate methods of apportionment, 3/10th of the tour cost should be allocated to employee A and 1/10th of the tour cost should be allocated to each of the seven other employees.

The amount paid by an employer in connection with a holiday journey is taxable income of the employee. The visa fee and insurance premium were paid in connection with Employee A's holiday journey. Thus they should also be reported.

As the trip was not for holiday purpose, the provisions on the taxation of holiday journey did not apply. However, the son's airfare was a private expense of Employee A. The reimbursement should be taxable as a perquisite.

For more information, please refer to Departmental Interpretation and Practice Notes No.41 - Salaries Tax - Taxation of Holiday Journey Benefits.

Yes, they are taxable. Although these bonus and commission were paid to you in year of assessment 2024/25, they are regarded as income for the last day of your employment (15 March 2024) and are your assessable income for the year of assessment 2023/24.

Your assessable income is salaries for 11 months. Furthermore, for tax purposes, you cannot claim to deduct the salary in lieu of notice paid by you as your expense. Hence, salaries for 11 months are assessable.

You should report this sum of money in your Tax Return – Individuals. Then, on a separate sheet of paper, you could describe the circumstances under which it was paid to you. You should also supply a copy of all relevant documents (e.g. employment contract, notice of termination of employment and/or agreement to terminate service). The Assessor will examine the information supplied by you (and if necessary, will also ask your employer to furnish further information and computation) to determine if any part of the lump sum is non-taxable, such as the severance/long service payment that your employer is required to pay to you under the provisions of the Employment Ordinance.

If you have already received your Salaries Tax assessment, you may apply for the holding over of the whole or a part of the provisional tax for year of assessment 2024/25. To do so, you have to submit an application in writing, stating your actual income for the period from 1 April to 15 October 2024 and your estimated income from 16 October 2024 to 31 March 2025. Your application must be received by the IRD not later than 28 days before the due date for payment of tax.

In other situations, when you complete your Tax Return – Individuals, you should state in your return the period of unemployment. The Assessor will consider your statements and compute the tax demand appropriate to your situation.

In 2011, the Court of Final Appeal has clarified that payments in lieu of notice contractually agreed are income from employment and chargeable to tax under the Inland Revenue Ordinance. The department is obligated to follow the judgment of the Court of Final Appeal as from the year of assessment 2012-13 onwards and will charge to salaries tax payments in lieu of notice which accrue on or after 1 April 2012. Payments in lieu of notice contractually agreed include sums made by employers to employees under section 7 of the Employment Ordinance. Therefore, employees who receive such payments in lieu of notice as from 1 April 2012 onwards are chargeable to salaries tax.

The department administers the law as clarified by the Court of Final Appeal, i.e. contractual payments in lieu of notice are chargeable to salaries tax.

Payments in lieu of notice which accrue on or after 1 April 2012 will be assessed to salaries tax.

The sum accrues on the date when the employer's agreement to pay the payment in lieu of notice becomes unconditional or on the date the employment is terminated, whichever is the earlier.

In the employer´s return of remuneration and pensions for the year ended 31 March 2024, the employer is required to report payments in lieu of notice.

In the notification, the employer is required to report payment in lieu of notice which accrues on or after 1 April 2012 to the employee who is about to cease to be employed.

In the notification, the employer is required to report payment in lieu of notice which accrues on or after 1 April 2012 to the employee who is about to depart from Hong Kong.

The department will examine the facts and circumstances of each case carefully to determine the date on which the payment in lieu of notice accrued. If the date of accrual of the payment in lieu of notice was wrongly provided, the department will consider taking penalty actions in accordance with the provisions of the Inland Revenue Ordinance.

Payments in lieu of notice are income from employment, not being in the nature of compensation. Since they are income paid under the express or implied term of an employment contract, they are assessable to salaries tax.

The department would examine carefully the foreign law which regulates the employment, including the right to payments in lieu of notice. The sum will be assessed to salaries tax if it is an income from employment, whether paid under the express or implied term of an employment contract.

The Commissioner does not have the discretion. The Commissioner administers the law as clarified by the Court of Final Appeal. Payments in lieu of notice are assessable to salaries tax since they are income from employment, whether paid under the express or implied term of an employment contract.

Generally, deductions under salaries tax are restricted to expenses wholly, exclusively and necessarily incurred in the production of assessable income. Payment in lieu of notice made by an employee for early termination of employment with the employer is not accepted as allowable deduction in computing his chargeable income and is not deductible for salaries tax purpose.

Severance payment on redundancy is the means whereby an employee is compensated for loss of employment through no fault of his own while payment in lieu of notice is an income from employment. Since the natures are different, the tax treatments are also different.

In July 2011, a tax appeal to the Court of Appeal having direct relevance to the taxation of payments in lieu of notice was formally withdrawn. Salaries tax assessments for 2011/12 raised prior to the withdrawal are not disturbed since they have become final and conclusive. It is considered more appropriate to assess to salaries tax payments in lieu of notice which accrues on or after 1 April 2012, i.e. in the year 2012/13 and thereafter.

Yes, in respect of the gains realized, you should file a form IR56B for each person. You are required to --

• report the amount of gains in item 11(j) of the form IR56B;
• where there is only one exercise, assignment or release transaction, show the date of transaction as both the start date and the end date in item 10 (i.e., the space for inserting the period of employment); but
• where there were more than one transaction, show the date of the first transaction as the start date and the date of the last transaction as the end date in item 10; and
• append to the forms IR56B a control list showing, in respect of each former employee/director -
  • name & HKIC/passport number with place of issue; and
  • the sheet number of the relevant form IR56B.

N. B.
For any former employee who has ceased to earn income chargeable to Hong Kong Salaries Tax (such as by reason of retirement or departure from Hong Kong), you are required to file a form IR56B only when the gains realized during the year of assessment have exceeded the basic personal allowance for that year of assessment.

Yes, you are required to supply the information to the IRD. From the information given, it would appear that the employee concerned must be liable to Salaries Tax so that you would have to file a form IR56E  for him within 3 months after employing him. You should confirm in item 13 of the form IR56E that this new employee has been conditionally granted a share option that can be exercised after rendering services in Hong Kong. In addition, you are also required to supply a list, as an attachment to the form IR56E, showing details of :

• the number and type of shares covered by the option;
• the consideration (if any) paid for the grant of the option;
• the consideration required to exercise the option; and
• the period within which the option must be exercised.

Yes, you are required to supply the information to the IRD.

You are required to confirm in item 18 of the form IR56G (Notification by an employer of an employee who is about to depart from Hong Kong) that that employee has share options not yet exercised, assigned or released. In addition, you should also state

• the number of shares that can be exercised after termination of employment; and
• the date on which the relevant share options were granted to that employee.

Subsequently when that employee has realized gains from the exercise, assignment or release of the share options, you will be required to report the amount of gains in form IR56B. Please see answer to question 34 for details.

For more information, please refer to Departmental Interpretation and Practice Notes No.38 - Salaries Tax - Employee Share Option Benefits.

Please click here for more details on taxation of share awards and share options.

Employers can submit and upload the data file via the "Online Mode" (Login of the eTAX Account by an Authorized Signer is required) or the "Mixed Mode" (Login of the eTAX Account is not required) of the Employer’s Return e-Filing Services.

When submitting the IR56B records in electronic format, employers can dispense with the filing of paper Forms IR56B. If the data file of IR56B records are uploaded via "Mixed Mode" of the Employer’s Return e-Filing Services, employers are also required to print and duly sign the cover page of the Control List (one page only) generated by the IR56 Form Preparation Tool or the approved self-developed software. If for annual filing, the Control List must be submitted together with the paper Employer's Return (Form BIR56A) and they should be signed by the same authorised signer.

You can migrate the employee’s details from the IRD IR56B Software to the IR56 Forms Preparation Tool by taking the following steps:

(i) Please click “Continue” after login.

(ii) Click “Export Data”.

(iii) Click “Yes” to confirm that the IR56B records would be sorted automatically.

(iv) Select “Upload the file through the Internet via e-filing Employer’s Return service under GovHK” and then click “Continue”.

(v) Click “OK” to save the exported XML file to the location as shown on the screen. If you want to change the location for saving the file, please click “Change Folder”.

(vi) The exported XML file can be used to import the personal particulars of the employees to the IR56 Forms Preparation Tool.

In the “Get Start” page of the IR56 Forms Preparation Tool, enter a Self-selected Key, select “Create a new data file with data import” and then select the XML file exported from the IRD IR56B Software and then click “Continue” to import data.

For further details on how to create a new data file by importing data from the XML file, please refer to para 5.3 of the User Guide of IR56 Forms Preparation Tool.

Important Note﹕

When using the IR56 Forms Preparation Tool, you can make use of the pull-down menu “Default Type” in the section “Select the Employer’s Return/Notification to be completed” to pre-set the “Type of form” to “Additional”.

You can click the sort button at the righ-hand side of “No.” to arrange the Control List to show all the incomplete records first. The incomplete records would be listed starting from the first page of the “Control List” page and then followed by the completed records.

This may be due to the fact that your browser has blocked the pop-up window of the Preparation Tool.  You can change the setting of your browser to allow the Department’s website to display pop-ups windows.  The steps to make such changes under Internet Explorer and Google Chorme are shown below:-

a) Internet Explorer

(i) Click the menu button on the toolbar and then select "Internet options".

(ii) Click "Privacy", and then click "Settings" under "Pop-up Blocker" section.

(iii) Enter the address of the Department's website "*.ird.gov.hk" at the "Address of website to allow", and then click "Add".

(iv) The website address of the Department "*.ird.gov.hk" should now be shown under "Allowed sites".

b) Google Chrome

(i) Click the menu button on the toolbar and then select “Settings”.

(ii) Click “Advanced”.

(iii) Click “Content settings”.

(iv) Click “Pop-ups and redirects”.

(v) Click “Add” on the right hand side of “Allow”.

(vi) Input the website address of the Department “[*.]ird.gov.hk” at the “Site” and then click “Add”.

(vii) The IRD website “[*.]ird.gov.hk” should now be shown under “Allow”.

If you do not know whether the recipient is a sole-proprietorship, partnership or unincorporated body of persons, please insert the name and business registration number of business in item 3(a) and skip item 2 and 3(b).

Yes, if you only know the Business Registration Number of the recipient, you can just complete item 3(a) and skip item 3(b) of the Form IR56M.